Changing Vendors in Changing Times
Bill Yearous, CIO of The Seattle Times, has recently been in the news. After watching his budget get cut in half over the past three years, he decided to reconsider several key vendor relationships. In the end, after watching Oracle’s annual fees increase at twice the rate of any other vendor he was contracted with, he made the brutally tough decision to sever the decade-long relationship.
About the switch, Mr. Yearous said: “It’s a little bit counterintuitive that the best technology turns out the be the technology that meets your business needs at the price you can afford, as opposed to who has the purest best technology.” Good enough, he adds, is a reflection of the economy.
The move off Oracle had plenty of unanticipated problems. But in the end, it’s still saving his company over $100K annually.
So how does a CIO decide when the savings are worth the risk?
- The more complex the solution and the more integrated it is into your entire delivery chain, the higher the risk, cost, distraction and necessary ROI to justify. Develop a realistic ROI that assumes things will go wrong.
- Also assume that smaller, lesser known vendors will require more due diligence, and therefore a greater investment in research time.
- Factor in missed opportunities of staff working on the migration instead of other key projects.
- Consider lost productivity due to retraining and a slew of new integrations.
- Is the change the right thing for the company? If it saves money but inhibits long-term growth opportunities, then it’s not a smart move.
- Assess the value of the lost vendor relationship.
- While vendors are willing to make exceptional financial deals in the current economy, consider whether you will you truly be able to take advantage of that package.
- Utilize an expert in software contracts to negotiate the best possible deal, best worded to your advantage. For instance, maintenance fees tied to a fixed index instead of the software’s list price might have avoided the kind of problem Mr. Yearous experienced.